Oregon Claimed Unallowable Federal Medicaid Reimbursement by Not Billing Manufacturers for Rebates for Some Physician-Administered Drugs

During CY 2010, the Oregon Health Authority, Division of Medical Assistance Programs (State agency), did not always comply with Federal Medicaid requirements for billing manufacturers for rebates for physician-administered drugs. Of the $11.7 million in paid claims reviewed, the State agency properly billed for rebates associated with $6.2 million. However, the State agency did not bill for rebates associated with $5.5 million.

The State agency did not always bill manufacturers for rebates because the State agency's Medicaid Management Information System (MMIS) did not have an edit to ensure that National Drug Codes (NDCs) were present on drug claims or an edit to validate NDCs if submitted. State agency officials stated that they thought NDC edits would be included in the MMIS when it became operational in December 2008. However, the State agency informed us that it did not implement these edits until July 1, 2011. The State agency also informed us that in

December 2012, it retroactively billed for rebates associated with claims for physician-administered drugs paid since July 1, 2011.

We recommended that the State agency (1) refund to the Federal Government $2.3 million (Federal share) for claim lines for single-source and top-20 multiple-source physician-administered drugs that were ineligible for Federal reimbursement; (2) work with CMS to determine the portion of the $1.1 million (Federal share) for other claim lines for physician administered drugs that was ineligible for Federal reimbursement and refund that amount; (3) work with CMS to determine and refund the unallowable Federal reimbursement for any physician-administered drugs claimed without NDCs and not billed for rebates before January 1, 2010, and after December 31, 2010; (4) verify that the NDC edits implemented on July 1, 2011, ensure that NDCs are present and validated for payment on all drug claims; and

(5) ensure that all physician-administered drugs eligible for rebates are processed for rebates. The State agency concurred with our first recommendation but did not concur with the refund amount and provided information on actions that it had taken since our audit. The State agency concurred with the four remaining recommendations and described corrective actions that it had taken or planned to take.